Investors interested in stocks from the Financial - Mortgage & Related Services sector have probably already heard of Federal Agricultural Mortgage (AGM) and Zillow Group (ZG). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Federal Agricultural Mortgage is sporting a Zacks Rank of #2 (Buy), while Zillow Group has a Zacks Rank of #3 (Hold). This means that AGM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AGM currently has a forward P/E ratio of 10.18, while ZG has a forward P/E of 43.50. We also note that AGM has a PEG ratio of 0.93. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZG currently has a PEG ratio of 1.41.
Another notable valuation metric for AGM is its P/B ratio of 1.73. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ZG has a P/B of 3.87.
These are just a few of the metrics contributing to AGM's Value grade of B and ZG's Value grade of F.
AGM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AGM is likely the superior value option right now.
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Federal Agricultural Mortgage Corporation (AGM): Free Stock Analysis Report Zillow Group, Inc. (ZG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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